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Disasters Keep Hitting Clean Energy Scam
By Amy Oliver Cooke and Michael Sandova  
December 6, 2011l 

It’s hard to keep up with all the disasters plaguing “clean” technology. We’ve highlighted some of them in previous columns, but now find ourselves overwhelmed with bad news for the green-at-any-cost crowd. So periodically we’ll provide a “renewable roundup,” reading and deconstructing the latest developments so you don’t have to. 

Running on Empty: Electric Cars 

Fisker Automotive, maker of luxury electric/hybrid vehicles, got a $529 million taxpayer guaranteed loan courtesy of the Department of Energy (DOE) in April 2010.  According to the DOE the money was for two production lines that would “create or save” up to 2,000 jobs in Wilmington, Delaware and “displace” 17,400,000 gallons of gasoline. Up to this point, Fisker has created only 700 jobs in California and Deleware. 

All that money; all that potential; and very few cars. Forbes contributor Bill Frezza writes that Fisker has delivered a total of 40 cars, and those have gone to the less than one percent among us such as “Leonardo DeCaprio and Ray Lane who received tax credits because they bought an electric car.” 

That’s only $13,225,000 per car. Don’t worry Leo and Ray didn’t have to pay that much.  According to Car and Driver the 2012 Fisker Karma is in the $100,000 neighborhood and can go a full 50 miles without using a drop of gasoline! Let’s face it; the Karma is not just an eco-feel good vehicle. It’s sweet looking, not like “smart cars” that resemble a Fisher-Price Cozy Coup with a battery.  But it isn’t really economical. 

Frezza reports that Fisker’s problems produce a ripple effect. Because the auto manufacturer keeps delaying production, a Michigan electric vehicle battery manufacturer laid off 125 employees just before Thanksgiving and reduced its 2011 earnings projection. 

Even in the face of brutal economic reality, green dreamers keep fantasizing and predict “electric cars would become the leading application for lithium ion batteries by 2015, surpassing laptop PCs and other handheld devices.” 

Stop laughing. 

Frezza asks, “Who are they kidding? How many portable electronic devices do you own? How many electric cars have you ever even seen?” 

The more economical Chevy Volt is having its own problems.  General Motors has sold just over 5,000 of the $40,000 electric vehicle so far this year. Now GM is offering a rental program to Volt owners worried about possible fire hazard in the electrical system. Drivers will have access to the free vehicle until GM resolves the issue. 

GM is quick to point out that the problem is not unique to its Volt, making sure it threw other electric automakers under the big green bus. According to the New York Daily News, “the company was working with other automakers to look at issues caused by what happens when electric vehicle power systems are damaged in a crash.” 

Tilting at Windmills: Subsidized Failure 

As detailed in our earlier reports on the fragility of the solar panel industry in light of its addiction to government subsidies, we noted that without taxpayer-backed funding on both sides of the artificial supply/demand equation, solar companies are facing a harsh economic reality.

Consumers really don’t like paying higher prices for energy, and not just American consumers. Even the Dutch are “Fall[ing] out of love with windmills,” according to a recent Reuters article. Pulling government subsidies due to budgetary constraints, the Netherlands seeks to push the enormous costs of this form of renewable energy source back on to individual household and businesses, and those customers are not too happy. 

For a country synonymous with windmills, the reality that given a true market choice of energy available at cost and not artificially manipulated with subsidies has forced consumers in that country to reevaluate their energy options. They already appear to be choosing “less expensive technologies than wind.” 

Abandoned wind farms containing thousands of idle windmills could be the future—as it already is in the present in places like Hawaii. 

Companies like Vestas, heavily invested in Colorado to the tune of more than $1 billion spread out over four production facilities, say “the industry is under a dark cloud.” 

The reason? The looming end of federal tax credits propping up the windmill business. In early November, the San Francisco Chronicle quoted Vestas Wind Systems CEO Ditlev Engel, who said the market for wind energy would “disappear” without the production tax credit (PTC) of 2.2 cents per kilowatt-hour. 

“Our concern is that if the PTC is not extended, history has shown us that these markets tend to fall off a cliff,” Engel told the Chronicle. Industry estimates claim that as much as 85 percent of the market would simply vanish without the PTCs. 

Perhaps in anticipation of the looming downturn in wind energy prospects, Vestas plans to shed $207 million in costs, cutting an undisclosed number of jobs. It wasn’t clear if those jobs to be eliminated would come from its Colorado operations. 

Without these federal tax credits scheduled to sunset in 2012, not only is wind not an economically viable alternative with little residual market demand, it isn’t even a consistently reliable energy source. 

Dimming Solar Prospects 

To say that that the prospects of that other renewable ‘panacea’—solar—aren’t bright (at least in the near future) would be quite an understatement. We’ve explored the ramifications of questionable government-backed and taxpayer-subsidized loan guarantees in earlier columns. But the externalities explored focused primarily on the implications to the U.S. solar industry. 

U.S. downturns in subsidized market production and demand have been mirrored in Europe, and now we’re beginning to see those factors play out for the bull in the solar panel array: China. 

Chinese solar panel manufacturers have already begun to respond to the “weak market demand and industry oversupply” of solar cells by reducing production. 

But even slashing manufacturing likely won’t save the vast majority of Chinese solar manufacturers over the next few years, according to Bloomberg. A “glut” of available inventory spurred on by anticipated sales to subsidized consumers in places like Europe has sent prices plummeting, dropping as much as 25 percent for components like solar wafers, in just a month’s time from October to November. 

Price per watt, one of the strongest measures of market pricing in the industry, have nearly halved in the last year, as government subsidy-driven investment, plant creation, production, and oversupply have dissipated once those “taxpayer” investments are taken off the table. 

The result? More bankruptcies. For those companies that remain, that means falling revenue as shipments of solar modules decline. 

Lowering prices on Chinese-manufactured solar panels has lead to accusations that the Chinese companies, backed by government subsidies and other preferred institutional support from Beijing, have begun to “dump” their excess inventory in the U.S. market at “less than fair value.” 

These complaints could lead to punitive tariffs, and a solar trade war with China. For their part, the Chinese have countered that similar U.S. subsidies for renewable energy production have created an “improper trade barrier” while denying any favoritism from the Chinese government. 

Global Warming Burn Out 

The Wall Street Journal’s Bret Stephens recently described global warming as “another system of doomsaying prophecy and faith in things unseen” complete with “an elaborate list of virtues, vices and indulgences.” 

All the green, clean technologies such as windmills, solar panels, and electric cars need the unwavering devotion of the faithful. 

Right now, “the conclave of global warming’s cardinals are meeting in Durban, South Africa, for their 17th conference in as many years.” The goal is to guilt rich countries into ponying up another $100 billion for their sins against Mother Nature that somehow will help poor nations “cope with the alleged effects of climate change.” 

Good luck with that. The U.S. is $15 trillion in debt and trying to throw a fraying lifeline to the European Union that is drowning in debt. 

No good revival is complete without hell, fire, and brimstone. 

“’We’re all going to die in five years’ unless a legally binding framework to cut greenhouse gas emissions is accepted by the 192 parties attending the United Nations’ confab…” That’s how Cathie Adams of Eagle Forum described a question posed to a group of “environmental extremists.” 

It’s difficult and exhausting to keep up the emotion necessary to have faith in that kind of doomsday prophecy, even more so when your scriptures have proven false. Two years ago Climategate exposed the fallacy of global warming with the “hide the decline” emails and now another fresh batch of emails have been released. 

While these emails do little to shake the faith of true believers, those on margins became a little more skeptical with reason. “Papers were withdrawn; source material re-examined. The Himalayan glaciers, it turned out, weren’t going to melt in 30 years. Nobody can say for sure how high the seas are likely to rise—if much at all. Greenland isn’t turning green. Florida isn’t going anywhere,” Stephens explained. 

With no environmental foundation and no economic foundation, global warming has little left but faith. And now that’s even shaky. 

Conclusion 

Whether it’s a ‘failure to launch’ or ‘failure to thrive,’ renewable energy solutions have so far failed to demonstrate the necessary economic and energy-efficient capacity to succeed in a true energy market or even to begin to meet government-mandated targets that creep steadily closer each year. Agents acting in a free market, as Megan McArdle points out in The Atlantic, show their hand when it comes to how they feel about the future—hence the hesitation to be “bullish” on solar. 

Governments in the U.S. and abroad have attempted to select winners (renewables) and losers (fossil fuels) in the energy with all the success of a resounding thud. Removing the government-mandated energy targets, loan guarantees, tax credits and other taxpayer-funded support and the renewable energy house of cards begins to topple in resounding fashion. The “myth” of “renewable” energy recycled by politicians and crony capitalists, driven by climate change alarmists and environmental fearmongers, withers in the face of the reality of markets and consumer preferences. 

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